IMO The Liquidation of Integrity Ins. Co. v. Celotex Asbestos Trust

Celotex Corporation manufactured and distributed products that contained asbestos. Thousands of asbestos-related claims were filed across the country against Celotex for bodily injury and property damage. In 1990, Celotex filed for Chapter 11 bankruptcy; the Celotex Asbestos Settlement Trust was formed thereafter to process the asbestos claims. As part of the bankruptcy case, Celotex sought a declaratory judgment that it was entitled to insurance coverage for all of the asbestos claims. The bankruptcy court determined that because some of Celotex's bodily injury and property damage excess insurers received inadequate notice of the claims, it barred Celotex from obtaining coverage. The Trust appealed, but the appellate court held that Celotex's duty to give notice to its insurers arose well before the company actually provided notice of the claims. The Trust filed proofs of claim with the Integrity Liquidator seeking coverage for future claims. The Liquidator denied the claims; a special master upheld the denial. The Appellate Division reversed, finding the trial court did not address future claims coverage. The appellate court found that the occurrences of asbestos injuries on which future claims were based were not known at the time of the bankruptcy, therefore, Celotex had no duty to provide reasonable notice. The Liquidator appealed that decision to the Supreme Court. The Supreme Court concluded that under collateral estoppel, the orders entered in the prior federal court proceedings finding one occurrence from which all pending a future claims derived (and that Celotex failed to notify its insurers) barred the proofs of claim filed by the Trust. View "IMO The Liquidation of Integrity Ins. Co. v. Celotex Asbestos Trust" on Justia Law